KYLE – District 45 State Representative Patrick Rose went before the Hays CISD Board of Trustees Monday night with a promise and, perhaps, a warning. Only the future knows for sure.

“Next session, school finance is very much an agenda that is on the table,” Rose told the school board. “That could be a good thing, or it can be a bad thing.”

The Hays officials were pretty clear with their response. They consider it a good thing.

Subsequent to school finance reform set during the 2005 legislative session, school districts in property poor districts are limited to a tax rate of $1.04 for Maintenance and Operations (M&O), and that’s only if they took a discretionary four cents for Fiscal Year 2007-8. Otherwise, they would be limited to one dollar, which represented property tax relief for millions of Texas homeowners after years of a $1.50 M&O maximum.

Any attempt to tax more than $1.04 for M&O is subject to voter approval, which is a dicey proposition for school districts. The law has made itself felt in Hays County, where voters in the San Marcos CISD rejected an extra 13 cents to $1.17 last November.

Now, Hays trustees fear that they, too, will have to test the voters in a year. Trustees President Chip DuPont said the district almost certainly will have to ask voters for a higher tax rate next year if teachers are to continue receiving pay raises to bring Hays into line with suburban school districts.

So, as far as Hays officials are concerned, any legislative action is at least a start.

“Either we have to have an election or they have to change the law,” Hays CISD Superintendent Kirk London said after Monday’s meeting.

Fuel pricing has emerged as another pressure on the operating budget for the 230-square-mile Hays CISD. Carter Scherff, the district’s chief operating officer, reported that diesel fuel is running about $4.25 per gallon, a serious issue for a district in which the majority of the school bus fleet burns diesel.

“If the current increases continue, we will have to make a substantial increase in our budget for next year,” Scherff told the board. Scherff put the adjustment between $100,000 and $200,000.

Rose indicated that legislators are well of the problem.

“I think we have a great opportunity to increase the transportation allotment,” Rose said.

As it happens, the Hays CISD is on the May 10 ballot with an $86.7 million bond issue that would require no tax increase. The district wants authority to issue the debt for construction of a middle school, two elementary schools and district-wide improvements.

Thus, rising property values within the Hays CISD have placed the school district in a somewhat paradoxical position. If the district wants to raise an extra $1 million for operations next year, voters would have to approve a tax increase. But the district can raise more than $85 million for new schools without a tax increase.

The difference lies in the two different sides of the tax rate. As property value continues to rise in the Hays CISD, the district receives less equalization money from the state under so-called “Robin Hood” provisions operating on the M&O side. But school districts don’t share money raised on the Interest & Sinking (I&S) side, which they use to pay down construction debt. Thus the Hays CISD fully realizes the benefit of property value growth on the I&S side, but that growth doesn’t help on the M&O side.

“We’d like to be able to do more for our employees and our employee groups,” London said to Rose, asking for more flexibility in the M&O rate.